Mountain size trouble for Australian coal lines

By Jonathan Barrett and Benjamin Weir

SYDNEY (Reuters) - Global coking coal supplies have been drastically interrupted by a small stretch of rail that wraps around a modest-sized Australian mountain range - and repair crews are unable to find a quick fix.

Australian rail operator Aurizon Holdings Ltd said on Friday it would take another four weeks to repair the Goonyella line, which transported 118 million tonnes of mainly coking coal in 2016 and has been hit by landslides.

The company said that its cyclone-damaged Blackwater coal haulage line - the second major rail corridor after Goonyella - would reopen on Monday at reduced capacity.

"Recovery and repairs are being undertaken at multiple sites along the Goonyella corridor, including at Black Mountain which experienced significant landslides," Aurizon said.

Multiple landslides and flooding knocked out the rail network when Cyclone Debbie ripped through the state of Queensland, a major coking coal region, last week.

The cutoff in exports of the key steelmaking ingredient, has left steelmakers in China, the world's biggest producer, scrambling for supplies, even looking as far as the United States, and pushed up prices.

Queensland accounts for more than 50 percent of the global seaborne coking coal market, which hit 314 million tonnes in 2016, according to Australia's Department of Industry.

Aurizon's note was the first update it has provided to the market since Monday. It had previously forecast Blackwater to come back on line this week, while there is no change to the Goonyella time table.

The much smaller Newlands and Moura rail networks are expected to be operational next week.

NOT A QUICK FIX

While the return of the Blackwater line will start replenishing coking coal supplies, the majority of coal in the region travels on the Goonyella line.

Goonyella wraps around a mountain range en route to port facilities, where repairs are hampered by risks of further landslides, while drenched terrain limits how quickly heavy equipment can be moved into place.

Buddhima Indraratna, an engineering professor specialising in railway geotechnology, said the trackbeds, known as ballasts, would have been infected.

"The ballasts are now probably contaminated with landslide mud and debri; fouled ballast needs to be replaced, or cleaned and placed again," Indraratna said.

"Any side slopes adjoining the track need to be stabilised properly so that subsequent sliding is prevented."

The repair work is occuring at the most difficult part of the almost 500 kms (310 miles) of Goonyella track, where one of the few nearby access points - the Marlborough-Sarina Road - has itself been cut due to landslide damage. The state government has estimated road repairs will take "at least six months".

Aurizon said on Friday it was working on "alternative routing options" such as moving coal onto the northern Newlands line or south via Blackwater.

That sets up a potential race to secure any spare capacity on the alternate routes, with trucking an unlikely viable option, said independent mining analyst Peter Strachan.

"There may well be some temporary trickle of truck-hosted haulage, but when you're looking at the tonnes involved that would be a trickle, they couldn't do with trucks what they can do with train lines," Strachan said.

(Reporting by Jonathan Barrett and Benjamin Weir in SYDNEY. Additional reporting by Tom Westbrook and James Regan.; Editing by Christian Schmollinger and Richard Pullin)